Earnest Deposit

It might just be here, but I never give ANY kind of earnest money deposit UNTIL an offer has been accepted. I wouldn't want a bunch of my checks (or even copies) floating around out there. Try asking for that the next few offers you make. I have learned that "going against the norm" takes persistence and saying "Why can't it be that way?" over and over until it becomes accepted. (Not saying I've done that with a LOT of things, but what I have dug my heels in has worked!)

Just a thought.

Rina

Make the offer, then if it is accepted give the earnest money. Cbrpower does the same with all his offers as well.

Writing checks for all your offers is not too smart. You are basically handing over your identity. Plus it may cost you more money just by ordering more checks...lol

Just my two cents...

My Broker requires that we are holding the Earnest money. On lines 352-354 of our NAR approved Residential Resale Real Estate Purchase Contract, it says "Earnest Money:Earnest Money is in the form of _personal check, _0ther:_____________ If applicable, Earnest Money has been received by Broker named in Section 8r and upon acceptance of this offer will be deposited with:
_Escrow Company _Brokers Trust Account"

I had a "Short Sale" listing a couple years ago. The Agent who was reprsenting the buyer (REI) sent me a copy of the Earnest Money check. The Bank accepted the contract after a few counter offers. The buyers agent did not have the check to open escrow. The bank threatened to sue both Brokers. My Broker told me to demand imediate deposit from the other Agent, or make the deposit myself. We got it worked out, but it could have been my money, and my loss if the money was awarded to the seller for nonperformance from the buyer.

Would it be safe then, for you, to hold ONE check for your buyer to go with any offers that are accepted? If a buyer is making all of their offers through one agent (which they should be), that would cover it, right?
You would suggest people try it the other way in their area first, though? From an investor's perspective?

Rina

If more than one offer is accepted, I would need a check for each property to open escrow. My Broker would not accept only one check for multiple properties. But the check does not get deposited until the contract is accepted by both parties, so it would not be necessary to have enough money in account to cover all offers (only as many as you would want to close on).

Al

You would need one for each offer accepted. But you're saying you need a check written for each offer when you present it?

Rina

I just fax a photocopy of a check to my realtor. She knows I will make it good in the end.

I suppose the rules are different for each area, AND brokers/agents may be willing to do something until they get burned once, then never again. Just like my realtor with the verbal offers. I guess you can't blame them.
I would still ask.

Rina

I only give an earnest deposit, after the offer has been accepted. When we are making 10 or more offers per week, faxing a copy of the earnest deposit check to the realtor ONE time should be okay.

As an Agent, I am saying, to the seller,(with the photo copy) that I am holding the check. If offer is accepted, and I don't have the funds to open escrow, what am I to do? It is this type of buisness practice that hurts the reputation of real estate agents. I want a check in hand to open escrow immediatly after contract is accepted. In my mind, this is the ethical way to do buisness. I could loose my license for misleading the seller, and having them believe that I have the money when I don't. In the purchase contract, I am telling the seller that I have the check. I would never accept a photocopy of a check.

Al

Including buys and sells, I have done at least 20 deals with this realtor. She knows perfectly well that if I say yes, it's yes. And if I say no, it's no.

She has also accepted counter-offers with a verbal from me with a promise of email confirmation to follow.

My realtor doesn't even ask for a check until a final counter has been accepted. But like Mark said, my yes is yes. Guaranteed. After many deals together. BUT her broker must be ok with that, too. (Maybe she doesn't give him a choice, knowing her. lol)

Needless to say... you NEVER burn a person you have this kind of relationship with.

I gave her a BARM last week to catch her up to speed. She's half-way through the book, all fired up. Now she wants to try investing again. Her daughter said "Mom, you tried that and you hated it." Gail said,"Yes, but now I have Rina." LOL. Looks like we will be learning together. She takes one side of the bridge, I get the other. Look out, Twin Ports!

There seems to be quite a controversy over the issue of Earnest money. I need to know the right approach to a difficult question on what is ethical and/or what is perfectly acceptable.
When you don't have the $1000.00 EM to back-up your offer, and you want to pursue the 25:1 strategy...whats a go-getter to do?? Go-getter a partner???

I like the idea of adding in the "additional terms section" of the agreement..."earnest money/initial deposit of, $1000.00 due within 7 days of acceptance or the contract is null and void."

you fax them a copy of a check thereby gaining time to collect the EM from the end buyer.

If my REA agree's to this approach I'll give it a shot. Any input is most appreciated.

If not having the funds is keeping you from making offers, try this and see what happens. You have nothing to lose. You would need to convince your agent to use this approach.

Al